ESPOO -- Nokia Corp. reports a continuation of strong operational performance in Nokia Networks and solid growth in Nokia Technologies.
FINANCIAL HIGHLIGHTS FOR NOKIA'S CONTINUING OPERATIONS
Nokia completes the sale of its HERE business in Q4 2015
Nokia completed on December 4, 2015 the sale of its HERE digital mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG.
The transaction, which was originally announced on August 3, 2015, valued HERE at an enterprise value of EUR 2.8 billion, subject to certain purchase price adjustments. Nokia received net proceeds of approximately EUR 2.55 billion from the transaction, which is consistent with Nokia's earlier estimated net proceeds of slightly above EUR 2.5 billion. In Q4 2015 Nokia booked a gain on the sale and a related release of cumulative foreign exchange translation differences totaling approximately EUR 1.1 billion as a result of the transaction. The gain was reported as part of discontinued operations.
On February 10, 2016, Nokia announced the results of its successful reopened public exchange offer for Alcatel-Lucent securities. Nokia will hold 91.25% of the share capital of Alcatel-Lucent, following the settlement of the securities tendered into the reopened offer, which is expected to occur on February 12, 2016. This equates to Nokia holding 88.07% of the share capital of Alcatel-Lucent on a fully diluted basis.
Nokia confirmed that it will issue approximately 321 million new shares as consideration for the Alcatel-Lucent securities that have been tendered into the reopened public exchange offer. Nokia expects to register these new shares with the Finnish Trade Register on February 12, 2016. After the registration, the total number of Nokia shares will equal approximately 5 769 million shares.
Assuming the conversion of all remaining outstanding Alcatel-Lucent shares and convertible bonds into Nokia shares at the exchange ratio offered in the public exchange offers, the total number of Nokia shares would equal approximately 6 billion shares.
As of the first quarter 2016, we expect to align our financial reporting under two areas: the Networks business and Nokia Technologies. The Networks business will be comprised of four business groups: Mobile Networks, Fixed Networks, Applications & Analytics and IP/Optical Networks. Nokia Technologies will continue to operate as a separate business group, with a clear focus on licensing and the incubation of new technologies, and will include the licensing and intellectual property portfolio management operations from Alcatel-Lucent. In addition, Nokia expects to operate the undersea cables business, Alcatel-Lucent Submarine Networks (ASN), and the antenna systems business, Radio Frequency Systems (RFS), as separate entities and plans to report ASN and RFS as part of Group Common Functions.
2015 was another year of dramatic transformation for Nokia and I am pleased that in the midst of all this change we were able to close the year with solid performances at both Nokia Networks and Nokia Technologies.
Nokia Networks delivered on its commitments for the full year, with a non-IFRS operating margin at the high end of the original guidance range and net sales up three percent on a reported currency basis. Pleasingly, both Mobile Networks and Global Services capped off the year with good fourth quarter results.
Nokia Technologies saw its net sales and operating profit grow considerably, based on strong licensing growth including a contribution from the arbitration award related to our licensing agreement with Samsung.
We have said consistently that we believe that our portfolio of innovation and intellectual property is second to none in the industry and that it has significant value that can be monetized. We expect to have further discussions with Samsung related to intellectual property and technology assets that were not covered by the arbitration process and will continue to pursue new licensing opportunities in a variety of sectors over the course of 2016 and beyond.
I was particularly pleased with our progress towards completing the Alcatel-Lucent transaction in the fourth quarter, culminating with the start of combined operations in early January. Our work as a combined company has gotten off to a strong start. Teams are preparing joint bids, we are working closely with our customers to ensure we can make fast and effective decisions about overlapping areas of our portfolio, and we are on target to deliver on our previously announced synergy savings.
While the competitive environment in Networks remained generally stable in the fourth quarter, we do expect some market headwinds in 2016 as 4G/LTE rollouts in China and some other markets start to slow. The first quarter, in particular, looks quite challenging as customers assess their CAPEX plans in light of increasing macro-economic uncertainty. In this environment, we will continue our sharp focus on operational and commercial discipline, ensure we deliver synergies as quickly as possible, and focus our energy on targeting the growth segments within the overall telecom market.
Nokia Corp. (NYSE: NOK)